Light Reading

Time for Set-Top Makers to Merge – Study

Alan Breznick
5/30/2014
50%
50%

As four of the biggest pay-TV providers in North America make plans to merge into two, it's time for set-top makers to do the same.

At least so says ABI Research . In a new study released this week, ABI concludes that a consolidation of set-top vendors is needed to meet the evolving demands of such combinations as AT&T Inc. (NYSE: T)'s proposed $49 billion buyout of DirecTV Group Inc. (NYSE: DTV), not to mention Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s proposed $45 billion acquisition of Time Warner Cable Inc. (NYSE: TWC). (See AT&T to Acquire DirecTV for $48.5B and Comcast's TWC Coup: 3 Things to Know.)

In a research note, ABI argues that AT&T's plans to acquire DirecTV particularly highlight the need for set-top boxes that can serve more than one kind of video delivery network. Yet, for the most part, the world's five top STB vendors -- Arris Group Inc. (Nasdaq: ARRS), Cisco Systems Inc. (Nasdaq: CSCO), EchoStar Corp. LLC (Nasdaq: SATS), Pace Micro Technology , and Technicolor (Euronext Paris: TCH; NYSE: TCH) -- "are heavily weighted to one sector, or, in some cases, have robust proportions serving two or three sectors," the firm said.

ABI adds that these five vendors, accounting for about 37% of global STB revenues in a mature yet fragmented market, cannot keep meeting the demands of pay-TV providers as they seek to deploy their video services over multiple networks, including cable, IPTV, satellite, and, presumably, over-the-top. "We continue to believe that integration of historically separate cable and IPTV providers with satellite set-top OEMs would bear fruit in the increasingly hybrid set-top box world generated with acquisitions," like AT&T's proposed purchase of DirecTV, said Sam Rosen, practice director of ABI Research.

ABI predicts that the global set-top market will top out at around 265 million units sold next year before starting to decline. In 2012, the last year for which figures are available, STB makers sold 236 million boxes around the world.

Fresh off its acquisition of Motorola Home, Arris captured the lead in the STB market with $2.1 billion in set-top revenues last year, driven by sales of 18.5 million cable and IPTV boxes, according to ABI. Pace came in second in revenues, even though it dropped behind third-placed Technicolor in sale volume.

Rosen explained that Pace, despite a 10% drop in sales volume, booted its STB revenues slightly by "focusing primarily on the high-end gateway market." He also credited Pace's performance to its "focus on services."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
5/31/2014 | 11:23:01 PM
Re: Deja vu
@DOShea, do you think there is a real future for the STB market? I think the prediction might be coming true. 
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
5/31/2014 | 11:20:03 PM
What about OTT
I think this really overlooks the impact that smart TVs and OTT media will have in the market. I think settop boxes are going to need to move to just a software platform that runs on a TV or USB drive that you plug in. The days of one sitting around are coming to an end. 
DOShea
50%
50%
DOShea,
User Rank: Blogger
5/31/2014 | 10:47:35 PM
Deja vu
Seems like bad things have been predicted for the largest of the traditional set-top box vendors for a while now. I thought the market was supposed to have started declining already. Well, I guess, some big service provider mergers will finally force some change.
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
5/31/2014 | 3:55:34 PM
Logical
Seems logical to me - there's probably too many set-top makers in an environment of service consolidation. 

And to be honest, there really isn't much innovation happening with these boxes. They aren't really keeping up with today's digital world. These boxes need to be able to integrate with other consumer electronics. Being able to control them from a phone, laptop of tablet would be way more useful than a remote. 
Flash Poll
From The Founder
Anshul Sadana answers questions from Steve Saunders, Light Reading's founder and CEO, about Arista's CloudVision, a global cloud network controller for workload orchestration and workflow automation delivering a turnkey solution for cloud networking.
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Custom TV
End-User or Enterprise Benefits to the New IP

7|30|15   |   04:27   |   (1) comment


Andrew Coward discusses what the New IP means to end users or enterprise customers. He explains compelling reasons, including how every customer can get their own network, from the transformation to the New IP.
LRTV Custom TV
Network Visibility & the New IP

7|30|15   |   02:23   |   (0) comments


Mukund Srigopal provides an explanation of what network visibility is and how it is essential as service providers transition to the New IP. In addition, the importance of the network packet broker is discussed.
Between the CEOs
Video Exclusive With Basil Alwan, Alcatel-Lucent

7|24|15   |   26:44   |   (5) comments


Basil Alwan, President of IP Routing & Transport at Alcatel-Lucent, discusses virtualization, cultural challenges, the capex crunch and more with Light Reading founder and CEO Steve Saunders.
LRTV Custom TV
VDF: Enable the Financial With Mobile Money

7|20|15   |   06:53   |   (0) comments


Ian Ravenscroft discusses how operators can expand to occupy the entire digital services value chain through service innovation.
LRTV Custom TV
Telefónica on OSS Transformation

7|20|15   |   06:01   |   (0) comments


Jose Gonzales discusses the details of Telefónica's operation transformation program.
LRTV Custom TV
Judi Achmadi on Huawei's Cloud Storage Solution

7|20|15   |   03:33   |   (0) comments


Judi discusses the key business goals of TelekomSigma's public cloud service and how Huawei's solution helps them address challenges.
LRTV Custom TV
KPN Enlightening Digital Business & IT Transformation

7|20|15   |   06:19   |   (0) comments


Rob de Beer discusses the changes that operators need to make with service innovation now coming from the Internet world.
LRTV Custom TV
Stratus Telco-Grade Cloud Solutions & NFV

7|20|15   |   07:34   |   (0) comments


Ali Kafel from Stratus Technologies addresses high-availability concerns within the telco industry with a solution that enables telcos to provide high-availability and stateful fault-tolerance using a software-based approach.
LRTV Documentaries
The Six Million Dollar Business Man

7|20|15   |   01:52   |   (0) comments


Steve Saunders, publisher. A man barely alive after an acquisition malfunction imploded the company he founded. Gentlemen, we can rebuild Light Reading. Better, faster, stronger.
Between the CEOs
CEO Chat With Anukool Lakhina, Guavus

7|20|15   |   38:51   |   (1) comment


Guavus CEO Anukool Lakhina talks to Light Reading founder and CEO Steve Saunders about the role of operational analytics in the communications services and networking sectors, particularly in relation to IoT.
LRTV Custom TV
IBM's Flash Storage With Intel QuickAssist

7|20|15   |   03:18   |   (0) comments


Intel's Bev Crair and IBM's Eric Herzog discuss how IBM's V9000 Flash Storage System has helped customers around the world. Featuring real-time compression powered by Intel QuickAssist Technology, the V9000 is a next-gen flash storage solution.
LRTV Huawei Video Resource Center
Thailand's AIS: Transforming to an FMC Operator

7|17|15   |   4:53   |   (0) comments


Saran Phaloprakarn, Senior VP of Fixed Broadband Business Management of Thailand's AIS, was a keynote speaker at the first Asia-Pacific Ultra Broadband Summit in Bangkok. In this video, he talks to Heavy Reading about transforming into an FMC (FBB+MBB+Content) operator.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Infographics
Network operators start seeing savings from NFV in the first year, according to a study by Affirmed Networks and ACG.
Hot Topics
Robbins Succeeds Chambers as Cisco Changes CEOs
Mitch Wagner, West Coast Bureau Chief, Light Reading, 7/27/2015
Cable Feuds With Senate Dems Over STBs
Alan Breznick, Cable/Video Practice Leader, 7/31/2015
RJio to Launch Its Own 4G Devices Brand
Gagandeep Kaur, Contributing Editor, 7/27/2015
Easing the Tech Pains for the Homeless
Carol Wilson, Editor-at-large, 7/28/2015
Like Us on Facebook
Twitter Feed
September 22, 2015
Media Begins With “Me”
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Basil Alwan, President of IP Routing & Transport at Alcatel-Lucent, discusses virtualization, cultural challenges, the capex crunch and more with Light Reading founder and CEO Steve Saunders.
Guavus CEO Anukool Lakhina talks to Light Reading founder and CEO Steve Saunders about the role of operational analytics in the communications services and networking sectors, particularly in relation to IoT.
Cats with Phones
Comes With Free Phone Stand Click Here
Who says cats don't have any skills?